HM Revenue & Customs (HMRC) has recently announced the launch of its ‘Offshore Disclosure Facility’ (ODF). This follows its recent success in obtaining offshore bank account details for UK taxpayers held at Barclays, HBOS, HSBC, Lloyds TSB and RBS. HMRC is also known to be approaching other banks and building societies operating in the UK for similar information.
Although the ODF is primarily aimed at those with previously undisclosed offshore accounts, all individuals and companies who are resident in the UK for tax purposes are now being given a one-off opportunity to disclose any errors or irregularities in their tax affairs over the last twenty years. If they comply with the terms of the ODF, they can expect penalties to be limited to 10% of the understated tax, which is considerably less than the maximum 100% penalty that can be sought.
Taxpayers are effectively being given two months to tell HMRC that they have a disclosure to make and a further five months to complete the disclosure and pay any tax, interest and penalties that might be due. Failure to do so could lead to the opportunity for the penalty being limited to 10% being lost.
Briefly, the ODF timetable is as follows: -
- By 22 June 2007 - Taxpayers must notify HMRC of the intention to make a disclosure
- By 22 July 2007 - HMRC will provide a disclosure reference
- By 22 November 2007 - Complete and submit the disclosure including a calculation of any tax, interest and penalties due and pay amounts owed in full
- By 30 April 2008 - HMRC will either confirm disclosure accepted or begin its own enquiry
HMRC has said that after 22 June 2007 it will actively ‘target those with offshore bank accounts and undeclared tax liabilities who have chosen not to come forward’. Penalties could be significantly higher than the 10% offered via the ODF. Worse still, although some people have reported the ODF as being a ‘tax amnesty’, HMRC hasn’t given any guarantees against possible criminal prosecution. If you are concerned about this, please seek specialist advice. There are other ways in which your case could be handled and a criminal prosecution avoided.
Tax payers should also ensure they only pay the correct amounts due. If they actually overstate the tax bill, the interest and penalties charged will be similarly overstated. We can help you ensure that you only pay the correct amounts of tax, interest and penalties due.
Those wanting to make disclosures not involving offshore bank accounts are likely to have to provide further evidence to satisfy HMRC that the disclosure is correct. Taxpayers and their advisers should seek specialist help to help ensure that the strict timetables set by the ODF aren’t missed because of this and that the beneficial terms being offered aren’t lost.
To discuss this in further detail, please get in touch with your usual Vantis contact. Alternatively, you can complete and submit the form below and we will contact you.